ISLAMABAD: Soon after assuming the charge of chairman of the Federal Board of Revenue, Dr Ashfaq Ahmed has decided that tax machinery will collect Re1 per invoice issued to customers of big retailers connected with electronic system of the bureau.

The news of the new tax circulated on social media and triggered criticism against the FBR chairman for burdening the customers with another indirect tax instead of taxing real income of tax evaders.

The issue prompted the FBR to come up with a clarification. It said that the rate of the service tax was not one per cent but Re1 per invoice irrespective of the amount.

Ashfaq Ahmed and the FBR spokesperson could not be contacted despite attempts.

In the post-budget press conference, Finance Minister Shaukat Tarin had announced that prizes would be given to the customers who demanded computerised bills through a computerised draw. However, he did not mention that money for the prizes would be generated through a new form of tax to be imposed on customers.

Money thus collected to be used for prizes to customers demanding computerised bills

Through use of technology about 10,000 points of sale (POS) were integrated with the FBR’s electronic system of real-time reporting of sales in FY21. However, the FBR had assured the International Monetary Fund of reaching 20,000 POS which was missed by a wide margin.

According to the finance minister’s claim, the FBR will take the number of the POS to at least 60,000 in FY22 and give Rs100 million prizes per month and raise this amount to Rs1bn per month to encourage customers to demand computerised bills.

Using this model 20 years ago, Mr Tarin said, he had increased the Habib Bank Limited’s deposits from a few million per month to Rs40bn, adding that Turkey had also successfully used the same model. At no point, the finance minister had said that his government would impose a tax on customers to raise money for the prize.

Last month, the FBR has announced that the computerised draw for the prizes for customers of integrated tier-1 retailers would be held every month starting in August 2021. The FBR has already issued procedures for prize scheme through an SR0.

An official of the FBR said that the parliament had already given power to the FBR to impose tax. Asked whether the FBR could impose a service tax, the official said that it was not a service tax. Currently, the provinces can impose sales tax on services while the federal government can impose sales tax on goods.

An official announcement of the FBR said that the nominal “Service Charge” at the rate of Re1 per invoice of whatever denomination would be collected under section 76 of the Sales Tax Act, 1990.

It further said that the money raised would be utilised to promote integration of all tier-1 retailers, launch a publicity campaign and finance a special prize scheme for customers who duly verified their invoices to determine the validity and genuineness of the invoices issued by the integrated tier-1 retailers.

Published in Dawn, September 5th, 2021